Break-Even Analysis

Media outlets often have websites that provide in-depth coverage of news and events. Portions of these websites are restricted to members who pay a monthly subscription to gain access to exclusive news and commentary.

These websites typically offer a free trial period to introduce viewers to the website. Assume that during a recent fiscal year, one outlet spent $4,467,100 on a promotional campaign for its website that offered two free months of service for new subscribers. In addition, assume the following information:

Determine the number of new customer accounts needed to break even on the cost of the promotional campaign. In forming your answer, (1) treat the cost of the promotional campaign as a fixed cost, and (2) treat the revenue less variable cost per account for the subscription period as the unit contribution margin.
_______ accounts

5. John the plumber has the following weekly demand for repairs by his business:

Q = 2,000 – 10(P)

Q = quantity of repairs demanded by customers per week.

P = average price per repair.

John chooses the price to charge to his customers (cause). The result (effect) will be the total number of repairs his customers want per week.

A.      Draw the demand curve faced by John the plumber. Numerically label its two end points.

B.      Create the table of numbers: P Q TR MR

P = average price per repair. You may skip numbers for price changes by $10 at a time.

TR = Total Revenue = PQ

MR = Marginal Revenue = (change in TR)/(change in Q)

Draw the MR curve on the diagram, as well/

C.      The MC (Marginal Cost) to John per repair is $20. What price (P) will be charged per repair, and how many repairs (Q) per week? Show it on your diagram with solved numbers.

D.      Label the Consumer Surplus on your diagram. Define Consumer Surplus, as well.

RollTide Corp is considering acquiring Tiger Inc and you are on the

team that is valuing the potential target firm. Tiger Inc's revenue growth rate is 10.2%, its COGS is 58% of sales, S&;A is 22% of sales, and NWC is 25% of sales. The forecast period for the valuation is 5 years, after which your team will apply a steady state growth rate is 6%. You are using a WACC rate of 13.5% and a tax rate is 32%. Initial year zero revenue is $10,000. Depreciation is $1350 per year, CAPEX is $1300 per year. The forecast period is 5 years.


1.    1. What are free cash flows per year? (10 pts)
2.    2. What is the terminal value (steady state value)? (3 points)
3.    3. What is Enterprise Value for this firm? (2 pts)
4.    4. The firm has cash of $550, debt of $2000, and preferred stock of $750. What is the value of equity? (3 pts)
5.    5. If there are 120 shares outstanding, what is stock price? (2pts)

You have three lines of training modules: Company Training (CT), On-line Training (OT), and Academic Training (AT). For each sold CT, you will receive $1,000 in revenue, while for each sold OT, you will receive $800 and for each AT, you will receive $700. Each module lasts for one month. To deliver the module CT, UQ-HDTC requires 100 hours of data scientist and computer programmer time. The module OT requires 300 hours of data scientist and 500 hours of computer programmer time, while AT requires 200 hours of data scientist and 100 hours of computer programmer time. Suppose you has purchased 1,000 hours of data scientists time and 800 hours worth of computer programmer time for each month. How many CT, OT, and AT modules you should sell per month, so as to maximize your revenue, given the constraints on data scientist and computer programmer time? Please form the problem as an LP problem and solve it using Tableu form of Simplex method.

Consider the market for pumpkin spice latte (PSL), Q is in thousand cups. Due to its “addictive” nature, local government is considering imposing a $1.00 tax on each cup. The demand and supply are: QD = 10 - 0.5P QS = -5 + 2P

A. (8) SOLVE for the pre-tax and tax prices and quantities: [HINT: It may help to draw the graph before calculating (b)] 1. (1) pre-tax equilibrium price and quantity in the pumpkin spice latte market 2. (6) price paid by buyers and price received by sellers under a $1.00 tax after paying the tax and the new equilibrium quantity under a $1.00 tax 3. (1) Government revenue from the tax Name _________________________________________________________ 10

B. (3) DRAW the PSL market and LABEL the following clearly 1. (1) pre-tax equilibrium P and Q 2. (1) Pb and Ps and Government revenue under a tax 3. (1) CS and PS and DWL under a tax

C. (4) EXPLAIN how demand and supply elasticity relates to consumer and producer burden of the tax

Assume that on September? 30, 2016?, Pontex?, ?Inc., purchased 5.5?% bonds of Clarkson Corporation at 96 as a? long-term, held-to-maturity investment. The maturity value of the bonds will be $ 24,000 on September? 30, 2021. The bonds pay interest on March 31 and September 30.

1) What method should PontexPontex use to account for its investment in the Clarkson Corp.? bonds?

a) amortized cost

b) consolidation

c) current market value

d) equity

(For 2-4 the accounts to choose from are Cash, Held to maturity investment in bonds, interest payable, interest receivable, interest revenue, and trading securities)

2) Using the? straight-line method of amortizing the discount on? bonds, journalize the purchase of the bonds in Clarksonon September? 30, 2016

3) Record the entry for the accrual of interest revenue on December? 31,2016.(Round to the nearest whole? dollar.)

4) Record the amortization of the bond discount on December? 31,2016.?(Round to the nearest whole? dollar.)

5) Show how Pontex would report everything related to the bond investment on its balance sheet at December? 31,2016.

Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill, a larger stationary gas grill, and the specialty smoker. In the coming year, Texas-Q expects to sell 15,300 portable grills, 45,900 stationary grills, and 5,100 smokers. Information on the three models is as follows:

Total fixed cost is $1,873,680.

Brady Construction Company contracted to build an apartment complex for a price of $6,900,000. Construction began in 2018 and was completed in 2020. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars.

Required:
Complete the following table. (Do not round intermediate calculations. Enter answers in dollars. Round your final answers to the nearest whole dollar. Negative amounts should be indicated by a minus sign.)

Gross Profit (loss) Recogonized

Revenue Recogonized over time/Revenue Recogonized upon completed for situation 1-6 years 2018, 2019, 2020

Texas-Q Company produces and sells barbeque grills. Texas-Q sells three models: a small portable gas grill, a larger stationary gas grill, and the specialty smoker. In the coming year, Texas-Q expects to sell 15,000 portable grills, 45,000 stationary grills, and 5,000 smokers. Information on the three models is as follows: Portable Stationary Smokers Price $89 $196 $255 Variable cost per unit 45 126 141 Total fixed cost is $1,918,440. Required: 1. What is the sales mix of portable grills to stationary grills to smokers? 2. Compute the break-even quantity of each product. 3. Prepare an income statement for Texas-Q for the coming year. What is the overall contribution margin ratio? Use the contribution margin ratio to compute overall break-even sales revenue. Enter the contribution margin ratio as a percentage rounded to two decimal places; round the break-even sales revenue to the nearest dollar. 4. Compute the margin of safety for the coming year.

Earnings per Share and Multiple-Step Income Statement
The following summarized data relate to Bowden Corporation's current operations:

Required
Prepare a multiple-step income statement for Bowden Corporation for the year. Include earnings per share disclosure at the bottom of the income statement.